Great candidates aren’t always easy to find. When you do find one, you want to take action—and fast. Once you’re ready to move forward, you extend an offer conditioned upon the completion of a background check. But what do you do when faced with a failed background check after making a job offer?

Background check results with red flags can throw a wrench in your plans to hire a candidate, and there are specific steps you need to take to carefully weigh your options. Here’s what you need to know when considering taking adverse action after a background check.

What Is a “Failed” Background Check?

Though a background check is not a traditional graded test like the kind we took in school, it can yield helpful information about a candidate and their suitability for hire. A thorough background check can uncover criminal history and determine if candidates possess valid licenses to practice in their field. There are no letter grades, but certain results can tell you whether it’s safe to continue with a hire, or if you need to take a step back and review the results more closely.

Depending on the results of their background check, candidates can “pass” when background check results suggest there are no risks associated with hiring the candidate, and you move forward. However,  a “fail” can indicate there is something in a candidate’s background check results which requires further review. 

If your candidate has a failed background check after a job offer, it’s critical to take the time to assess the nature of the particular findings. One offense, or “hit,” may not automatically indicate a problematic background check result, particularly if it occurred many years in the past and is at a low level of seriousness. More recent or violent offenses can be more concerning. Here are some examples of background check results which might indicate a need for further review:

  • Extensive criminal history, including any combination of violent crimes, repeat offenses, sexual offenses, or convictions for embezzlement or company theft
  • Evidence of misrepresented credentials, including education, employment or certifications and licenses, including fake degrees
  • Serious driving offenses (for individuals applying for driving positions)
  • Positive test results for restricted or illegal substances

Steps for Considering and Managing Adverse Action

There are times when you may need to reconsider a job offer based on background check results, but before you take any adverse action, you’ll need to consult your internal policies and abide by legal guidelines. Follow these six steps to guide your actions with candidates who have failed their background check after a job offer:

1. Follow a compliant disclosure and authorization process

To help candidates understand what can happen during the background check process, it’s essential to spell it out in your background check disclosure form. Make sure your disclosure form states your intent to use background check information to make employment-related decisions, and be sure to get candidate authorization before proceeding with the background check.

2. Follow your hiring policy

In the event you have a candidate with potentially risky background check results, you’ll need a policy in place to outline the actions you will take. Your hiring policy should describe the circumstances in which an offer of employment can be affected by background check results. You may find it helpful to include a decision tree in your policy, to give you a visual map of “if, then” action steps you can take when considering possible adverse action. For example, under your policy, candidates with violations involving company theft may require further review. In contrast, candidates with a single misdemeanor in their past might continue in the hiring process.

3. Provide adverse action notification beforehand

Once you’ve determined a need for further review, you will need to make proper notification to candidates. Anytime you are considering adverse action based on background check results, you’ll need to provide candidates with the following documents, as required by the FCRA:

4. Give the candidate time to respond

Candidates may not always be aware of information in their background that could impact their employment. Even if they are aware of criminal or other findings from their background check, they need an opportunity to view the results, understand their rights, and prepare a response. Make sure your policy outlines how much time you will give candidates to respond during the adverse action process. Many organizations provide five days, though you may decide to provide more.

5. Carefully determine if you can move forward

Withdrawing an offer of employment is not easy, particularly with a great candidate who is otherwise a strong fit for your organization. Therefore, you’ll want to be sure you have taken all the necessary steps to make an informed decision—and one you won’t regret later. At this time, you’ll need to consult available partners and resources to make sure you have covered all bases. The following individuals and resources can help you:

6. Continue with the hire or take adverse action

Taking adverse action is regrettable for both the organization and the candidate, but eventually you’ll need to decide to rescind your job offer or proceed with hiring. Take the time to carefully consider all information before taking action, because sometimes candidates may provide new updates to clarify their initial background check results.

If the candidate can explain or dispute their background check results, and their record is updated or certain results are removed from their record, you may determine you can move forward with the hiring process. Conversely, if the candidate can’t explain the results or does not dispute them, and you have consulted your policy and other advisers, you may need to move forward with taking adverse action.

To take adverse action, you’ll need to provide the candidate with an adverse action notice. In the notice, you will state the job offer is being rescinded due to adverse background check results that were not disputed. The notice will also need to include the following details:

  • The name of the background check company that ran the report
  • Notification that the decision was made by you, the employer, and not the background check company or credit reporting agency (CRA)
  • A copy of their consumer rights under the FCRA
  • A copy of the background check report
  • Notification of the candidate's right to request another copy of their report within 60 days


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How to Craft a Comprehensive Background Screening and Adverse Action Policy

The hiring decisions you make based on background check results have a sizable impact on your organization as well as candidates’ careers. As a result, you want your background screening policy to clearly spell out the steps you take to protect the workplace, and the conditions under which you may take adverse action. 

To help you develop a thorough background screening policy and process, work with a background screening partner who is committed to helping you follow compliant screening practices and who strives to deliver high-quality background checks. Make sure your background screening company performs the following activities:

  • Focuses on checking the right people and backgrounds the first time, so you get accurate results
  • Helps streamline and navigate the adverse action process required under the Fair Credit Reporting Act (FCRA) by using tools such as the adverse action workflow, advising you on best practices and providing real solutions to your daily challenges so you stay in compliance with applicable laws specific to your various local and state requirements
  • Conducts periodic reviews to help you keep your hiring practices and policies in alignment

Know How to Approach Failed Background Checks

Being faced with the choice of taking adverse action is less painful when you have a clear policy and the necessary resources to help you. When your background screening policy outlines the actions you’ll take when candidates fail their background check, you can be more certain you haven’t overlooked any required steps. With the help of a reputable background screening partner who understands best practices and your compliance obligations for taking adverse action, you can have greater confidence in your ability to make fair and well-informed hiring decisions.

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